HF Group is set to receive Sh1 billion from Britam Holdings to boost its capital base as the mortgage lender transitions into a full-fledged bank.
On Wednesday, HF Group said it had signed a capital injection from Britam as part of its broader strategy to power growth and cement its-full banking strategy.
''The funds will help accelerate the bank’s operations boosting SME lending while also allowing the bank to leverage its mortgage leadership by intensifying end-user finance specifically to the affordable housing segment,'' HF Group CEO Robert Kibaara said.
He said the funding is a vote of confidence informed by the results being witnessed through the lender's business transformation initiatives.
In 2019, HF Group announced plans to offer retail banking as part of a diversification strategy.
The mortgage lender's fortune has been improving in the past two years, cutting losses in the last financial year by 81.6 per cent attributed to reduced operating costs. This was from a loss of Sh598.2 million the previous year.
Last year, it shut down its investment unit, HF development and Investment Ltd (HFDI), in a move aimed at cutting losses and strengthening liquidity.
Most of HFDI’s assets and liabilities were transferred to the parent company.
Even so, HF Group remains sufficiently capitalised with a core capital to risk-weighted assets ratio of 13.3 per cent, 2.8 per cent points above the statutory requirement of 10.5 per cent.
The total capital to risk-weighted assets ratio came in at 14.6 per cent, exceeding the statutory requirement by 0.1 per cent points. The cash injection by Britam is expected to further improve the capital ratio.
Kibaara said the firm has diversified into new business segments such as SME banking, diaspora banking and personal banking, growing customer numbers by 25 per cent in two years.
